Pharma Does not only Travel by Air

Even if the Cool Logistics Conference in Antwerp is traditionally maritime oriented, in its 10th edition air cargo was able to slip in through a debate on the supposed competition with
the ocean mode for pharma shipments.

The debaters were Morgane Hanssen, Key Account Manager Shippers & Forwarders, Port of Antwerp and Nathan De Valck, Cargo Business & Product Manager Brussels Airport. The starting question
was to what extent the ocean mode has been able to snatch away volume from the air mode and if it were possible to match the consequences.
Mr De Valck agreed that the shift had been a matter of concern within TIACA, but that – over the last few years – the air cargo industry had been able to get its act together. “We have even been
able to attract more pharma,” he said. “When in the past shippers were sending pharma as general cargo shipments, there has been a shift in their behaviour to temperature-controlled.”

Low vs high value
Ms Hanssen replied that sending pharma by air is a historical issue for two reasons. “Firstly, within the companies there is this tradition of shipping according to need and that leaves no time
for ocean shipping. Secondly, to many shippers ports are a black hole, as terminal information is hard to come by, which is difficult for a quality-driven industry. That leads to a lack of
confidence. On the other hand, about 80% of pharma is shipped by ocean, but then we are talking about the low-value products. In the high-value segment the volumes are too low to fill a sea
container.”
Temperature deviation is the pharma shippers’ main concern, said Mr De Valck. “We have to control the temperature, given the fact that there are some 16 to 18 handover points between the plant
and the final destination such as the hospitals.” To which Ms Hanssen replied that reefers could be the safer option for ocean freight.
To the question whether this could lead to some cooperation between the two modes, Mr De Valck answered that this would be rather possible between different gateways. “At Brussels Airport, we
have this relationship with the Port of Antwerp. We have common interests, serving the same markets and the same customers. Let’s share knowledge and develop Best Practices. There is a lot to
gain from this multi-modal concept.”

Balancing cost vs speed
Ms Hanssen: “You mustn’t forget this is a forwarder-driven market. If there is sufficient time they will go for ocean, if not they will opt for air, which is more expensive. It all depends on
what you want to achieve. Antwerp to the U.S. takes a sailing time of 10 days. A lot depends on the design of the supply chain.”
Mr De Valck agreed. “There is always the balance of cost vs speed. Only 1% of the total volume of goods is transported by air, but as for the value it is about 30%. So as for pharma, the less
capital-intensive shipments will travel by sea, the high-capital segments by air. You have to look forward into the pipelines of the pharma factories, but I think the two modes are like
communicating barrels.”

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Liability
Liability was another issue tabled at the conference. In the air mode this is covered by the Montreal Convention, which sets a compensation that is much lower than the real value of the goods.
“On the other hand, the size of air cargo pharma shipments is relatively small,” said Mr De Valck. “Besides, shippers or forwarders often take an extra insurance.”
In the ocean business the regulations and conventions are rather old and not really tailor-made for this type of products,” Ms Hanssen admitted. According to Mr De Valck the air cargo chain very
often ends up preventing things going wrong.
From an Irish remark the audience learned that Ireland is a huge exporter of pharmaceuticals that are trucked to continental airports, thus also using the sea mode. So the two modes can be easily
blended. However, Nathan De Valck does not believe in the combination of the two modes on the same route, he said.

Possibilities of air cargo are underestimated
Other reactions from the audience revealed that the air cargo industry, and Pharma.aero in particular, still has to spread the word on its possibilities. Reacting to the remark that the airline
industry is focused on passenger traffic, viewing cargo as an addition only, Nathan De Valck explained that it is rather the other way around. “The airline industry loses money on economy and
low-cost passengers, while cargo is a must-have to keep most carriers in the black.”
As for temperature control sea freight is way ahead of airfreight, which has no specific technology in this respect, was another bias Mr De Valck had to eradicate. “A lot of development and
innovation is going on. We are using passive containers, which are less expensive than the active ones. At BRU we put on-tarmac cool dollies at the disposal of pharma shippers at no cost. That
has led shippers to develop a preference for specific airports. At BRU we see pharma shipments being trucked in from Northern Scandinavia and Southern Portugal. In Europe pharma and perishables
account for 3 to 4% of the air cargo market, in BRU this is 7% to 8%.” So it pays off to invest in dedicated equipment, he resumed.